Required information [The following information applies to the questions displayed below.] Astro Company sold 23,000 units of its only product and reported income of $264,600 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 44% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $156,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($56 per unit) Variable costs ($35 per unit) Contribution margin Fixed costs Income $ 1,288,000 805,000 483,000 218,400 $ 264,600 3. Compute the sales level required in both dollars and units to earn $260,000 of target income for next year with the machine installed. (Do not round intermediate calculations. Round your answers to 2 decimal places. Round "Contribution margin ratio" to nearest whole percentage) Answer is complete but not entirely correct. Sales level required in dollars Numerator: Contribution margin $ Sales level required in units Numerator: Fixed costs $ Denominator: 1 Selling price per unit = 21 X 1 56.00% X = $ Sales dollars required 38 Denominator: = Sales units required 5,825 units Contribution margin ratio 218,400 x $ 37.50 X ==
Required information [The following information applies to the questions displayed below.] Astro Company sold 23,000 units of its only product and reported income of $264,600 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 44% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $156,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($56 per unit) Variable costs ($35 per unit) Contribution margin Fixed costs Income $ 1,288,000 805,000 483,000 218,400 $ 264,600 3. Compute the sales level required in both dollars and units to earn $260,000 of target income for next year with the machine installed. (Do not round intermediate calculations. Round your answers to 2 decimal places. Round "Contribution margin ratio" to nearest whole percentage) Answer is complete but not entirely correct. Sales level required in dollars Numerator: Contribution margin $ Sales level required in units Numerator: Fixed costs $ Denominator: 1 Selling price per unit = 21 X 1 56.00% X = $ Sales dollars required 38 Denominator: = Sales units required 5,825 units Contribution margin ratio 218,400 x $ 37.50 X ==
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter10: Cost Analysis For Management Decision Making
Section: Chapter Questions
Problem 8P: The production of a new product required Zion Manufacturing Co. to lease additional plant...
Related questions
Question
Dengar
![Required information
[The following information applies to the questions displayed below.]
Astro Company sold 23,000 units of its only product and reported income of $264,600 for the current
year. During a planning session for next year's activities, the production manager notes that variable
costs can be reduced 44% by installing a machine that automates several operations. To obtain these
savings, the company must increase its annual fixed costs by $156,000. Total units sold and the selling
price per unit will not change.
ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Sales ($56 per unit)
Variable costs ($35 per unit)
Contribution margin
Fixed costs
Income
$ 1,288,000
805,000
483,000
218,400
$ 264,600
3. Compute the sales level required in both dollars and units to earn $260,000 of target income for next year with the
machine installed. (Do not round intermediate calculations. Round your answers to 2 decimal places. Round
"Contribution margin ratio" to nearest whole percentage)
Sales level required in dollars
Numerator:
Contribution margin
$
Sales level required in units
Numerator:
Fixed costs
$
Answer is complete but not entirely correct.
Denominator:
X
I
Selling price per unit
21 x
I
56.00%
218,400 x
I
$
Denominator:
Contribution margin ratio
=
Sales dollars required
38
$
=
Sales units required
37.50 x
=
5,825
units](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F72aa5c36-5077-431e-a32a-805e2e329582%2F3606a4ea-352b-4b51-b03f-ce7fb6ef170a%2F8gg8z1_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Astro Company sold 23,000 units of its only product and reported income of $264,600 for the current
year. During a planning session for next year's activities, the production manager notes that variable
costs can be reduced 44% by installing a machine that automates several operations. To obtain these
savings, the company must increase its annual fixed costs by $156,000. Total units sold and the selling
price per unit will not change.
ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Sales ($56 per unit)
Variable costs ($35 per unit)
Contribution margin
Fixed costs
Income
$ 1,288,000
805,000
483,000
218,400
$ 264,600
3. Compute the sales level required in both dollars and units to earn $260,000 of target income for next year with the
machine installed. (Do not round intermediate calculations. Round your answers to 2 decimal places. Round
"Contribution margin ratio" to nearest whole percentage)
Sales level required in dollars
Numerator:
Contribution margin
$
Sales level required in units
Numerator:
Fixed costs
$
Answer is complete but not entirely correct.
Denominator:
X
I
Selling price per unit
21 x
I
56.00%
218,400 x
I
$
Denominator:
Contribution margin ratio
=
Sales dollars required
38
$
=
Sales units required
37.50 x
=
5,825
units
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Recommended textbooks for you
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning